Repealing Obamacare?

Repealing Obamacare won't happen

Despite Republican pledges, repealing Obamacare will be almost impossible.

Around 30 million Americans would be without insurance should the ACA be repealed and nothing put in place to help these people.

There are roughly

• 10 million people receiving health insurance through the various exchanges

• 10 million through Medicaid and another

• 10 million through off-exchange and small group policies.

These people could all lose their coverage if the act was repealed.

♦ The promise to repeal and replace the Affordable Care Act has been a staple of the Republican Party platform virtually since the law’s enactment in 2010.

Much of the increase in healthcare costs that the Republican party blamed on Obamacare, including rising premiums and deductibles, actually has little to do with Obamacare.  These things stem from much older and broader causes.

Perhaps more important, dismantling key elements of the law risks leaving the U.S. healthcare system in chaos — certainly in worse shape than it was even before the Affordable Care Act was passed.

The Affordable Care Act has many parts that intertwined.  Removing some of them could throw everything into chaos for millions of Americans.  Resulting in actually raising costs when Mr. Trump boasted about reducing costs.

Backlash at the ballot box

There are many provisions of the Affordable Care Act that are appreciated by the public more than GOP chest pounding would have you believe.  Repealing them will certainly result in a backlash at the ballot boxes.

Republicans made the public think Obamacare caused all their troubles.  Starting in January, the GOP will be the party that will own every change made to the law and take the blame for every consequence of those changes.  

If the ACA was repealed tomorrow costs would continue to go up.  They can kill or wound the boogey man but if  the GOP does not stop the rise in healthcare costs, then they will be blamed going forward. 

This is serious for the GOP because if they fail they will be viewed as charlatans not worthy of the vote.

Assistance from democrats

President-elect Donald Trump pledged to replace it with something terrific.   This promise is about to come face-to-face with reality.

Repealing many Obamacare provisions isn’t possible without the assistance from congressional Democrats.

Making changes won’t be easy.  Many provisions of the Affordable Care Act are subject to filibuster in the Senate.  The GOP would need to 60 votes to avoid a filibuster and they don’t have them.

So it is no surprise that President-elect Trump has indicated he would like to keep some parts of the ACA.  These he says are the parts that are popular.  They are popular but they are also impossible for the GOP to muster enough votes to eliminate. 

Popular things include many consumer-protection reforms, a ban on exclusions or higher premiums for preexisting conditions, and caps on annual and lifetime benefits.  The right to keep children on their parents insurance plan is critical for many families.

Change by defunding

Things that could be tinkered with are things related to spending.  The GOP could try to cut off funding to some parts of the ACA through use of what is called budget reconciliation legislation.  This requires only a majority vote in the Senate.  With the split in the Senate so close it is likely that radical proposals will cause enough compassionate Republicans to refuse to go along.

The Republicans tried using budget reconciliation several times in the past but their efforts were always vetoed by President Obama.

It was easy to pass a bill when they knew it would never become law and they would never have to face the American people when things went sour.  The situation is now very much changed.  Any action the GOP takes will land soundly on their shoulders should it go badly.

• They could try to repeal tax subsidies for premiums and cost-sharing subsidies. This would hit the poorest people the hardest.  There are agreements with insurers in states using the federal exchange that would allow them to immediately cancel their policies if the cost-sharing subsidies were eliminated. 

Cancellations are subject to state laws, and it’s unclear how many states would require the policies to remain in force through the year.  States that allow insurance companies to pull out of the market if the cost-sharing payments cease could leave millions of people without any other options.  The poorest of the poor would be thrown to the wind. 

• They could try to undo Medicaid expansion by messing with the Medicaid funds.  But this would  throw State finances into chaos.  And a good number of those States are Republican controlled.  Repealing Medicaid expansion will drive up costs for hospitals, which have been one of the major beneficiaries from the expansion.  The expansion kept many rural hospital from going bankrupt and brought welcome relief from the burden of providing care for uninsured patients who could not pay.

• They could repeal some taxes levied by the law and widely despised by some influential industries.  But those taxes go to fund various parts of the law and eliminating the funds without eliminating the parts of the law would leave a large funding nightmare.

• They could repeal the medical device tax.  They could repeal the Cadillac tax.   A tax on high-quality health plans such as those sponsored by large employers and many unions. The tax has not yet been collected.  It was supposed to go into effect in 2018 but it was deferred to 2020.  Repeal of both has bipartisan support and by doing so they could champion that they did something.

If Mr. Trump decides to simply starve the Affordable Care Act by use of administrative action he could do that.  But it would be hard to say he gave the American people something terrific.   Of course Mr. Trump has been known to forget quickly what he said even when he said it many times.  The voters have good memories and the news organizations will certainly keep reminding them.

Republican alternatives

Republican alternatives have been sketchy, and their potential for maintaining coverage for the 20 - 30 million Americans receiving coverage via Obamacare dubious.

Mr. Trump’s campaign healthcare plan included eliminating the individual mandate, which would drive lots of insurers out of the individual market.   Insurance companies do not want to see that happen because their traditional market, large companies, has been shrinking over the years.  Obamacare helped insurance companies increase their revenues through the expanded individual insurance market.

Medicaid:  Mr. Trump has also spoken of block-granting Medicaid to the states.  This  would merely be an invitation to many state governments to cut Medicaid benefits.

Tax deduction:  Mr. Trump has suggested making premiums tax deductible for individuals, as they are for corporations and those receiving healthcare through their employers.  That’s a good idea, but it’s also of limited use for working-class and low-income households who pay little or no taxes now and would not be able use the deduction.

Health savings accounts:  Mr. Trump has championed the use of Health Savings Accounts (HSA).  These are tax-exempt savings accounts to be used to help pay healthcare costs.  This is not a new idea, HSAs have been around a long time.

It is a proposal that benefits the rich and is virtually worthless to low-income households that don’t pay much federal income tax. People working for minimum wages have no means to fund such accounts.  So this idea will not help them.

High-risk pools:  Mr. Trump has suggested reestablishing high-risk pools to enroll people with especially costly healthcare needs.  Mr. Trump called this "a proven approach" to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage. 

High-risk pools had been promoted by House Speaker Paul Ryan.

Prior to the ACA, 35 states experimenting with high-risk pools and they failed miserably.  The pools needed more funding than they got.  This caused states to limit enrollment or set premiums so high they became unaffordable. 

It is highly unlikely that today’s congressional Republicans would be willing to fund any such pools. 

Sales across state lines:  Mr. Trump has spoken about and allowing the sale of policies across state lines. He has implied it would be the greatest thing for competition and premiums would come down drastically. In truth, such an action would launch a race to the bottom as insurers established themselves in states with the least consumer protections and skimpiest minimum benefits requirements.  Gone would be the promise of "so much better."’

Individual mandate:  Mr. Trump has railed against the mandate that everyone purchase insurance. Removing the mandates but leaving in place the ban on exclusions for pre-existing conditions would enrage the insurance companies. They will either need to raise premiums or face a huge loss in profits.

It was the insurance companies that insisted the mandate was needed.  The GOP would have everyone believe this was a socialist plot but in reality the idea of an individual mandate dates back to the late 1980’s and a conservative think tank called the Heritage Foundation.

It was realized in the early 90’s that for any healthcare reforms to be successful everyone would need to participate.  The individual mandate was proposed not just by Democrats but by more than one Republican administration.

• In 1991, George W.H. Bush worked on a proposal that included an individual mandate.  Between 1991-1993 half the Republicans in the Senate came together on their alternative to Hillarycare, it also included an individual mandate.  Everyone was afraid of the free riders who would not have insurance and would instead rely upon hospitals to provide care for free.

• In 1993, Newt Gingrich was a supporter of the individual mandate.

• In 2008, Mr. Obama was opposed to the individual mandate.  It was only after it became clear no serious healthcare reform was possible unless everyone had a stake that he agreed to a mandate.

• Today,  Mitt Romney continues to defend the individual mandate, whereas Newt Gingrich changed his mind in the spring of 2015.

More conservatives oppose the individual mandate today in part because it was proposed by a Democratic President.  Many conservatives are trying to portray themselves as more righteous by calling the individual mandate a violation of individual liberty.  And interesting twist since they were one of the originators of this concept.

Minimum benefits:  Mr. Trump might be able to eliminate by administrative order some mandated minimum benefits, such as pregnancy and maternity care, mental health services and emergency services.  This is dicey since things like maternity care are expensive and this benefit is very popular.

They could try to come up with more bare-bones or catastrophic plans, which would carry lower premiums but provide lower benefits.  This may satisfy some conservatives but when the public actually starts trying to use such policies the outcry over skimpy benefit will surely be worse than the current cries about high deductibles — "I have insurance but I can’t afford to use it."

Pre-existing conditions:  The Republicans cannot touch the pre-existing conditions benefit.  But they may be able to fiddle with this benefit by imposing a condition requiring continuous coverage, that is, no lapse in coverage for some period of time.

The insurance companies might feel a little bit of relief.  But how would the GOP care for people who had no choice but to drop coverage temporarily because they lost their job and had no money to buy insurance ? 

CHIP:  The Child Health Insurance Program, or CHIP, comes up for reauthorization next year. The program covers about 8 million children in low-income households who would lose their benefits if the program is allowed to die.  Hillary Clinton was involved in getting this going.  Do the Republicans kill this program and throw close to 8 million kids out on the street without insurance ?

What’s next?

The Republican party has really not paid serious attention to the U.S. healthcare system. It has pretty much sat on the sidelines refusing to work with their Democratic colleagues to try to address some of the many problems.   The GOP spent more time on obstructing problem-solving efforts by federal agencies and demonizing the Affordable Care Act.  Now they are the government in power, and the risks and rewards of a new healthcare policy are in their hands.

Republicans could make things better by careful policymaking and cooperation with the Democrats. Or Republicans could make things worse by maintaining their ideological opposition to Obamacare. 

If they make things immensely worse, then they will just be opening up a wide door for the progressive wing of the Democratic party to walk through.  Once that happens, there won’t be talk of fixing their mistakes, we will end up with National Health Insurance.  Conservatives are cringing at that thought.

We are all waiting to see what Mr. Trump does.